JBS will start trading shares in Brazil and the US – 07/12/2023 – Market

Preparing a new leap, JBS, one of the largest food companies in the world, announced this Wednesday (12) that it will propose to its shareholders to trade their shares both on the New York Stock Exchange (USA) and on the B3, the Brazilian Stock Exchange, the which is called double listing.

To do so, approval at a general meeting of shareholders and authorizations from regulatory bodies – the CVM (Securities and Exchange Commission) and the SEC (Securities and Exchange Commission) will be required.

If all goes well, the shares traded today will be exchanged for new company shares by the end of this year.

In an interview with Sheetthe global president of JBS, Gilberto Tomazoni, stated that the objective with this change is to unlock the value of the company, currently undervalued in comparison with others in the same field.

This index is usually obtained by dividing the company’s market value by its earnings before taxes, interest, depreciation and amortization.

To get an idea, in the American Pilgrim´s, acquired by JBS, this index is 9.3. JBS’s is 5.9.

“With this, we start to increase our investment capacity, having access to institutional investors that only operate on the New York Stock Exchange”, said Tomazoni.

Upon joining NYSE, JBS will have to demonstrate that it has strengthened its governance, especially in relation to money laundering rules.

On the other hand, it will have access to a market able to buy more shares of the company than its Bonds (debt securities), which today are surcharged by at least 1.5% in relation to similar companies operating in the US.

The company estimates that this will generate savings in the financial cost of the debt – which today stands at US$ 17 billion.

“This proposal will give more flexibility in issuing shares to finance our growth,” said Guilherme Cavalcanti, global finance vice president and director of investor relations at JBS. “In addition, it helps to deleverage and reduce our cost of capital, allowing the company to compete on a level playing field with its global peers.”

How will the process

To make this change, JBS intends to create a new company, JBS NV, headquartered in the Netherlands. It will serve as a financial vehicle to act as a foreign issuer, a necessary condition to issue BDRs (Brazilian Depositary Receipts) in Brazil and the USA.

“The beauty of this business is that, when it is concluded, this operation does not change anything, any aspect of the operation or management of JBS. We will continue with the headquarters in Marginal [em São Paulo]”, said Tomazoni.

To issue BDRs, the new company will have to apply for registration with the CVM and the B3 subject to approval by the shareholders.

Once approved, JBS will no longer have its shares traded on B3 and will only trade BDRs. Under the proposal, each BDR will be backed by a Class A share, both on B3 and in the US. There will be no difference in treatment between shareholders. The rules and values ​​will be the same, including for minority shareholders, according to the company.

The dual listing will begin with the merger of JBS shares, including those of the controlling shareholders –the Batista family, led by Joesley– by JBS Participações Societárias.

In return, each shareholder will receive one preferred share automatically converted into a Class A share. In this exchange, two JBS SA shares are delivered to obtain a Class A share.

The Batistas undertake to allocate all their shares to JBS Participações, a subsidiary of JBS NV. In the end, they will have 20.89% of the total capital. A share conversion mechanism was created so that the controllers are not diluted.

BRL 2.2 billion stimulus

To encourage shareholder endorsement, JBS also informed that it intends to distribute R$ 2.2 billion in dividends to serve as a source of funds for eventual payments of taxes levied on this operation.

With a platform diversified by type of food product (poultry, pork, beef, sheep and fish, as well as vegetables), JBS employs more than 260,000 workers, concentrated in 130 factories and offices on all continents, in countries such as Brazil, United States, Canada, United Kingdom, Australia, China, among others.

Among its brands are Seara, Swift, Pilgrim’s Pride, Moy Park, Primo, Just Bare, among many others that reach 190 countries.